Reducing costs top our priorities… self-financing “Evolve” projects
Jose Maria Magrina; Managing Director of Arabian Cement Company, said that his company will participate in tunnel projects beneath Suez Canal, in addition to, participating in Housing Ministry’s projects, especially Dar Misr, and Beit Al Watan, through supplying cement by distributors.
Maria added that ACC’s supplies through distributors reached 1.5 million tones. He also added that the best solution for the current economic crisis, includes floating the currency, allow market to determine the price through supply and demand, in addition to, borrowing from international foreign institutions. According to Maria, the cost of acquiring a cement company is less than establishing a new plant, pointing out that, the volume of investment needed to finance the establishment of new cement plant exceeds $200 million as what happened with ACC share; this is the amount that enables investor to acquire major share in a cement company listed on EGX, especially after latest declines in companies’ shares prices.
He said that ACC’s upcoming investment opportunities will be represented in companies listed on EGX, in which prices of cement companies’ shares are less than the fair value of these companies. He added that that the Company has no intention to apply for the new cement licenses, launched by Industrial Development Authority. He pointed out that the Egyptian market does not need new cement licenses, in the light of dollar crisis in Egypt, as the state cannot provide $2bn to purchase all needed equipment for the new plants, explaining that the average cost for each plant hits $ 200 mn. He also said that production capacity of cement market reaches 70-75 mn ton, while the local consumption reaches 50 mn ton annually, pointing out that the expectation of increasing cement consumption to 80 mn ton annually are incorrect due to stability of demands on cement for years. In regard with buying new cement licenses’ term sheet, Maria said his company is one of the major companies in cement market and we wanted to know all the details, without applying to the new licenses.
Regarding dollar crisis in Egypt, Maria stated that the Company needs dollar credits to purchase coal, equipment, and Machine Spare Parts, while banks cover part of these credits only, the theme which caused the company to suspend its production twice, due to suppliers’ refusal to provide needed quantities. Maria said ACC imports coal from Ukraine, Poland, South Africa and Spain, with average consumption of 300 k ton annually. He also revealed that the company intends to expand its production capacities through operational enhancements, pointing out that the Company targets cutting fuel costs through launching Evolve Investments & Project Management. The Project is established with the capital of EGP 250 mn and aims to build own and operate waste treatment plants and providing organic and alternative fuels to the energy Intensive Industries. Maria also stated that the company has not decided the amount of funding needed for the project, pointing out that such projects costs between € 3-5 mn. The project will be funded through self-financing.
It is worth mentioning that ACC net profits has increased to EGP 246,3 mn during the first 9 months of 2015, compared to EGP 201,8 mn during the same period of 2014, with 22% increase.
